The Format 'War': Observations and Predictions

At Costco this week, I saw the high definition DVD Format War epitomized. A Blu-Ray kiosk with a monitor playing dazzling images from popular films, with a jaw-dropping price of $279. Beside it was some HD-DVD promotional materials, without a monitor or even an HD-DVD player in sight, instead relying on that tired phrase "up to six times the resolution!" and the low price of $200. Before this night I was a full HD-DVD believer, convinced by its low price and simplified disc design that would result in lower-priced movies eventually. But when Blu-Ray gets to $279, that means their next player model will probably be below $200 not too soon, and by then the price advantage of HD-DVD goes out the window. I had never really considered Blu-Ray before, since I would never pay $500 or $400 for one, but at an affordable price you have to look at both formats equally. And in this increasingly common environment, with a gaping contrast in marketing presented to the consumer, I can't imagine HD-DVD winning over too many customers.

It's become a common sight at most electronic stores. Target sells movies on both formats, but only offers Blu-Ray players -- complete with a snazzy kiosk displaying Blade Runner and other knockouts. BestBuy sometimes sets up an HD-DVD monitor, but it's nowhere near the showmanship of the Sony-sponsored Blu-Ray kiosk. Although HD-DVD reportedly wrote DreamWorks a nice check for their exclusive backing, it looks like Sony's capital will keep them from ever "losing" in this format war.

But is it really a format war? I don't see it as one, mostly because of the third adversary in the fight: standard definition DVDs. Despite over a year of high-definition offerings, production and sales of DVDs are as strong as ever, with no slowdown in sight. Since high def players are compatible with S-DVDs, it ensures the standard discs will continue to be produced indefinitely. And since S-DVDs are very cheap compared to their better-looking counterparts, and will always feature a much larger selection, consumers will continue to buy them. Not a war, it will be more like a prolonged conflict -- like we've seen between video game systems over the past two decades. And like video game consoles, each side will have a few hot exclusive titles and there will be plenty available for both formats. The real die hards will have both kinds of players, but most people will be happy with one or the other -- still continuing to buy standard discs.

All of this is very good news for consumers, as both formats continue to hack away at their prices and offer attractive free-movie packages with purchase. HD-DVD comes with 300 and The Bourne Identity in the box, with five more available free through mail. Blu-Ray offers five by mail, with slightly better offerings. Wal-Mart even had a doorbuster PS3 sale on Black Friday where you could get 15 total free Blu-Ray movies. But there's also a lot of consumer confusion: when I told my wife about the attractive high def prices her reaction was "then would you get rid of your old DVDs?" I think this is a common thought, because when people hear "format war" they imagine CDs vs. cassette or BetaMax vs. VHS. That's why the term "format war" doesn't really apply to this situation, since there's already a viable alternative that's not going away any time soon. Even when analog broadcast signals are turned off in 2009, millions will continue to have analog televisions because they will be supported by all cable and satellite services, as well as the converter boxes. And to answer my wife's question, yes I would be keeping my "old" DVDs and continue to buy them: will I ever need a high def version of The Third Man? The Simpsons? Will Danger: Diabolik ever be released in high def? Doubtful.